Yes, you're reading it correctly. As others have mentioned, if you use top-off water, you should take a gravity reading after it's been topped off and sufficiently mixed.

Do you know it's properly calibrated? The little paper scale in the tube can slip around if the glue comes loose (from heat, etc). Use it to measure the gravity of distilled water around 65°F. It should read damn close to 1.000. If not, get a new hydrometer.

Its a new Hydrometer, I just bought it for this batch. I used 3lbs of wheat DME and 3lbs of Light DME with 4 oz of Malto-Dextrin. I did a partial boil and then topped off with water before the reading. The temp of the test liquid was 75 degrees F, which according to the temp guide I got should have only been a slight difference (.002 difference).

Also, sorry I didn't reply to everyone, I appreciate ya'll trying to help. I should have put more information with the picture. Sorry ya'll!